EXPLANATORY MEMORANDUM

EXPLANATORY STATEMENT
Select Legislative Instrument 2005 No. 26
Issued by the Authority of the Minister for Veterans’ Affairs
Veterans' Entitlements Act 1986
Veterans’ Entitlements (DFISA-like Payment) Regulations 2005
Section 216 of the Veterans’ Entitlements Act 1986 (the Act) provides, in
part, that the Governor-General may make regulations, not inconsistent
with the Act, prescribing all matters which are by the Act required or
permitted to be prescribed, or which are necessary or convenient to be
prescribed for carrying out or giving effect to the Act.
From 20 September 2004, an allowance called the Defence Force Income
Support Allowance (DFISA) was introduced under Part VIIAB of the Act
(section 118N), payable to people whose social security income support
payment is reduced or not payable because of certain service-related
disability benefits (referred to as adjusted disability pension).
The amount of DFISA payable equals the difference between the amount
of social security payment (including a nil amount) a person actually
receives and the amount of social security payment the person would
have received if their adjusted disability pension was exempted from their
assessment but included in the calculation of any rent assistance
entitlements. DFISA was introduced by amendments to the Act.
The DFISA amendments could not also provide for beneficiaries of
Commonwealth income support payments paid under schemes or
legislation other than the Social Security Act 1991(SSA) because these
other income support payments were based on, but not necessarily
identical to, the calculation of the SSA payments. Therefore, the DFISA
amendments also included an amendment to enable these beneficiaries to
be compensated by benefits made pursuant to regulations under the Act
(section 118NJ).
The purpose of the Regulations is to enable DFISA-like payments to be
paid to people who are eligible for income support payments (primary
payment) under certain Commonwealth programs but who miss out on
those benefits either totally or partially because they or their partner
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receive adjusted disability pension and these benefits are included as
income in the means test for the primary payment.
The Regulations make provision for DFISA-like payments. DFISA-like
payments represent the difference between the amount of income support
payment (including a nil amount) a person actually receives (primary
payment) and the amount of income support payment the person would
receive if adjusted disability pension was not included in the assessment,
but was included in the calculation of any rent assistance entitlements.
The Regulations also provide for two other types of benefits to be made
available to DFISA-like payment recipients whose primary payment is
reduced to nil because of the adjusted disability pension:
 The first type consists of a financial payment that is equivalent to any
amount that would have been payable to a person (as a secondary
benefit) if the person had received the primary payment.
 The second type consists of non-financial benefits such as Health Care
Cards that would have been provided to the person (as a secondary
non-financial benefit) if the person had received the primary payment.
Further details of the operation of the DFISA-like payment scheme are at
Attachment A.
Details of the Regulations are set out in Attachment B.
The Act specifies no conditions that need to be met before the power to
make the Regulations may be exercised.
The Regulations would be a legislative instrument for the purposes of the
Legislative Instruments Act 2003.
The Regulations would be taken to have commenced on
20 September 2004 in order to ensure that DFISA-like payments are
payable on and from the same date that DFISA payments were payable.
For the purposes of subsection 12(2) (retrospective legislative
instruments) of the Legislative Instruments Act 2003 the Regulations
would not disadvantage a person or impose liabilities on a person.
For the purposes of the definition of “explanatory statement” in
subsection 4(1) of the Legislative Instruments Act 2003 (documents
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incorporated in legislative instruments) the documents incorporated-by-
reference in the Regulations are:
(i) Aboriginal and Torres Strait Islander Study Assistance Scheme
(ABSTUDY);
(ii) Farm Household Support Act 1992;
(iii) Social Security Act 1991;
(iv) Taxation Administration Act 1953;
(v) Veterans’ Entitlements Act 1986.
These documents are available on the website (COMLAW
http://www.comlaw.gov.au/) of the Australian Government Attorney-
General’s Department.
(vi) interim income support guidelines;
The program is outlined on the Department of Agriculture, Farms and
Fisheries' website at:
http://www.daff.gov.au/
(vii) Overall Living Allowance Rate Calculator;
The Calculator is referred to on the Department of Education, Science
and Training's website at:
http://www.dest.gov.au/schools/indigenous/abstudy_2005/abstudy2005/c
alculating_ABSTUDY_rates.htm
(viii) Sugar Industry Reform Program 2004 Guidelines.
The program is outlined on the Department of Agriculture, Farms and
Fisheries website at:
http://www.affa.gov.au/content/output.cfm?ObjectID=3662DAEF-3235-
4FA8-86F13B5961C60A12&contType=outputs
For the purposes of the definition of “explanatory statement”
(consultation) in subsection 4(1) of the Legislative Instruments Act 2003,
the Rule-Maker decided that consultation in respect of the Regulations
was not appropriate because interested parties had been consulted about
the issues leading to the implementation of the DFISA legislation and the
Regulations in the course of the Clarke Review 2004 and in any event the
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Regulations were required as a matter of urgency so as to enable benefits
to be paid to the relevant beneficiaries as soon as possible.
0409987A-050221NT
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ATTACHMENT A
Under the Act, adjusted disability pension paid under the Act or the
Military Rehabilitation and Compensation Act 2004 is not taken into
account when assessing the rate of income support payment payable to
veterans, their partners and war widow(er)s.
However, adjusted disability pension is included in the assessment of the
rate of social security payments and certain income support payments
made under other Commonwealth legislation or programs.
For those people who qualify for income support payments other than
those made under social security law which are reduced or not payable
because of adjusted disability pension, a payment called the DFISA-like
payment has been created.
The Living Allowance under the ABSTUDY Program is an example of a
means-tested income support payment that is provided other than under
the Social Security Act 1991 (SSA) and that can be reduced or not
payable if the beneficiary or their partner receives income in the form of
adjusted disability pension.
The calculation of income support payments made outside of the social
security law is generally based on social security law payment
calculations. However, as there can be slight differences in those
calculations, it was not viable to include those payments in the DFISA
legislation. Instead, it was decided to provide the DFISA-like payment
by way of regulations under the Act.
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ATTACHMENT B
Details of the Veterans’ Entitlements (DFISA-like Payment)
Regulations 2005
Part 1 Preliminary
Regulation 1 provides that the name of the Regulations is the
Veterans’ Entitlements (DFISA-like Payment)
Regulations 2005.
Regulation 2 specifies 20 September 2004 as the date on which the
Regulations will be taken to have commenced.
Regulation 3 sets out the purpose of the Regulations, namely that
they enable a DFISA-like payment, an associated
payment and an associated non-financial benefit to be
paid and provided (as the case requires) to eligible
persons on or after 20 September 2004.
Regulation 4 defines the terms used in the Regulations.
The only definitions that are not self-explanatory and
that require further explanation are “adjusted
disability pension” and “Commonwealth scheme”
“adjusted disability pension” is defined in section
118NA of the Veterans’ Entitlements Act 1986 (the
Act) and means:
(a) a pension under Part II or IV [of the Act] (other
than a pension that is payable under section 30 [of
the Act] to a dependant of a deceased veteran); or
(b) temporary incapacity allowance under Part VI [of
the Act]; or
(c) a pension payable because of subsection 4(6) or
(8B) of the Veterans' Entitlements (Transitional
Provisions and Consequential Amendments) Act
1986 (other than a pension payable in respect of a
child); or
(d) a payment (either as a weekly amount or a lump
sum) under section 68, 71, 75 or 80 of the MRCA
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[Military Rehabilitation and Compensation Act
2004] (permanent impairment); or
(e) a payment of a Special Rate Disability Pension
under Part 6 of Chapter 4 of the MRCA.
“Commonwealth scheme” is defined in subsection
118NJ(3) of the Act and means:
(a) an Act; or
(b) regulations or an instrument made under an Act;
or
(c) a program administered by the Commonwealth.
Part 2 DFISA-like payment
Regulation 5 sets out the eligibility criteria for a DFISA-like
payment to a person on a day on or after 20
September 2004 (subregulation 5(1)):
 adjusted disability pension is payable to the
person or their partner on the day; and either
(i) a primary payment (defined in regulation
4) is payable to the person on the day but
because adjusted disability pension is
payable to the person or their partner on
that day, the primary payment is
reduced, including being reduced to a nil
amount; or
(ii) if it weren’t for the adjusted disability
pension, a primary payment would be
payable to the person on that day.
There are some times when DFISA-like payment is
not payable to an eligible person on a day on or after
20 September 2004 (subregulation 5(2)):
 the payment would be a nil amount;
 the Department of Veterans’ Affairs (DVA)
requested the person to nominate a bank
account (into which DFISA-like payments
could be made) within 28 days and the person
failed to do so;
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 before the day, the potential recipient of the
payment had notified DVA in writing that he
or she did not want a payment and the person
had not revoked this notification.
A potential recipient of a DFISA-like payment may
decide he or she does not want a DFISA-like
payment or wishes to revoke their election not to
receive DFISA-like payments. In this situation the
Regulations provide as follows (subregulation 5(3)):
 the person must notify DVA in writing in
accordance with section 5T of the Act; and
 the day on which the notification takes effect will
be ascertained in accordance with section 5T.
The Regulations make provision for a person in the
situation where a (final) instalment of Exceptional
Circumstances Relief Payment or Farm Help Income
Support under the Farm Household Support Act 1992
(FHSA) (defined in subregulation 4(1))(hereinafter
these two payments are referred to as "primary farm
help payment") that is otherwise payable to a person
is deemed to be not payable to the person if the
person dies. Instead the final instalment is payable to
the person’s estate
The difficulty here is that eligibility for DFISA-like
payment is dependent on a primary payment being
payable to a person (ie in this case the primary farm
help payment) but because the FHSA states that the
primary payment that a person is otherwise eligible to
receive is deemed to be not payable to the person
where the person dies then the eligibility rules for the
DFISA-like payment do not, prima facie, apply and
unless special provision was made in respect of the
situation a DFISA-like payment would not be
payable in those circumstances. Accordingly the
Regulations address this situation (subregulation
5(4)):
 by providing that despite the FHSA deeming an
instalment of primary payment otherwise payable
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to be not payable, for the purpose of making a
DFISA-like payment the primary payment is
taken to have been payable to the person.
The result of this would be that one of the eligibility
rules for the DFISA-like payment would have been
satisfied and the DFISA-like payment may be made to
the deceased person’s estate.
Part 3 Associated Benefits
Regulation 6 describes the means for working out the rate of the
DFISA-like payment, namely via the Method
Statements in Schedule 1 to the Regulations.
Regulation 7 enables DFISA-like payment to be paid in arrears and
by instalments and specifies the payday that the
instalment is to be paid.
It does this by applying section 121 of the Act to
DFISA-like payment as if the payment were pension
and as if the reference to "DFISA" in subsection
121(6A) were a reference to DFISA-like payment.
Subsection 121(6A) deals with "rounding" and
modifies the application of a number of subsections
in section 121 to DFISA (and therefore, by virtue of
this Regulation, to DFISA-like payments).
Regulation 8 deals with eligibility for associated payments.
Associated payments are payable to a person to
whom DFISA-like payments are payable but whose
primary payment is not payable because of adjusted
disability pension. Associated payments are paid in
lieu of secondary payments that would have been
payable to the person if the primary payment had
been payable.
The eligibility criteria for an associated payment for a
person on a day on or after 20 September 2004 is:
 a primary payment (defined in regulation 4) is
not payable to the person on the day but only
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because adjusted disability pension was
payable to the person or the person’s partner
on that day and it was regarded as ordinary
income for the purpose of the means-test for
the primary payment; and
 a secondary payment is not payable to the
person on the day but only because the primary
payment is not payable to the person on that
day; and
 DFISA-like payment is payable to the person
on that day.
Regulation 9 states that the rate of an associated payment for a
person eligible for such a payment on or after 20
September 2004 is the same rate as that for the
secondary payment that would have been payable to
the person but for the primary payment not being
payable to the person because adjusted disability
pension was payable to the person or the person's
partner.
Regulation 10 deals with eligibility for associated non-financial
benefits. These are benefits of a non-financial nature
(eg health care card) that would have been provided
to the person if the primary payment was payable to
the person. For this regulation to apply, the primary
payment must be not payable because of adjusted
disability pension and a DFISA-like payment must be
payable to the person.
The eligibility criteria for an associated non-financial
benefit for a person on a day on or after 20
September 2004 is:
 a primary payment (defined in regulation 4) is
not payable to the person on the day but only
because adjusted disability pension was
payable to the person or the person’s partner
on that day and it was regarded as ordinary
income for the purpose of the means-test for
the primary payment; and
 a secondary non-financial benefit is not
provided to the person on the day but only
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because the primary payment is not payable to
the person on that day; and
 DFISA-like payment is payable to the person
on that day.
Regulation 11 states that the associated non-financial benefit for a
person eligible for such a benefit on or after 20
September 2004 is the secondary non-financial
benefit that would have been provided to the person
but for the primary payment not being payable to the
person because adjusted disability pension was
payable to the person or the person's partner.
Part 4 General
Regulation 12 operates where the Repatriation Commission
(Commission), under section 122 of the Act (the
provision setting out procedures for paying pension),
determines (under subsection 122(4)) that DFISA-like
payment or an associated payment ("the payments") is
to be paid into a beneficiary’s bank account. In this
situation Regulation 12 provides as follows:
 the Commission may direct that the payments be
paid at certain intervals into a bank account
nominated by the beneficiary.
 a nominated bank account must be an account
maintained by the beneficiary either as a sole
account or as a joint account or an account-in-
common.
 where an eligible person fails to nominate a bank
account as requested by the Commission, within 28
days or such longer period allowed by the
Commission (relevant period), then DFISA-like
payment ceases to be payable to the person.
 if an eligible person does nominate a bank account
after the expiry of the relevant period then DFISA-
like payment is payable again from the date the
person nominates the bank account.
Regulation 13 deals with the situation where the Commissioner of
Taxation issues a notice to deduct tax from a person’s
DFISA-like payment or associated payment. In this
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situation the Repatriation Commission must, in
accordance with Subdivision 260-A in Schedule 1 to
the Taxation Administration Act 1953, direct the
relevant officials in DVA to make the appropriate
deductions from instalments of DFISA-like payment,
or from an amount of associated payment, payable to
the beneficiary concerned and pay the amount
deducted to the Commissioner of Taxation.
Subdivision 260-A in Schedule 1 to the Taxation
Administration Act 1953 enables the Commissioner of
Taxation to, among other things, give notice to an
entity (eg the Repatriation Commission) by whom
money is due or accruing to the debtor (eg recipient of
DFISA-like payment or an associated payment) to pay
to the Commissioner of Taxation the amount specified
in the notice.
Regulation 14 imposes obligations on those recipients of DFISA-like
payment who do not receive any amount of a relevant
primary payment.
This Regulation is necessary because people who
receive primary payments are often required to comply
with obligations eg to provide certain reports.
Accordingly, where the amount of primary payment
payable to a person is nil, the DFISA-like payment is
basically the equivalent of the primary payment the
person would otherwise have received and it is
consistent that the beneficiary should comply with the
same obligations that would have applied if the person
had received the primary payment.
If a recipient received some amount of the primary
payment in addition to a DFISA-like payment then the
person would automatically be required to comply
with the relevant obligations in respect of the primary
payment that were imposed under the income support
scheme that governed the primary payment.
Regulation 14 does not apply in these situations.
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Accordingly Regulation 14 provides that if a DFISA-
like payment is payable to a person on a day and the
rate of primary payment payable to the person on that
day is nil or is not payable to the person on that day,
then the person must comply with any requirements
under the Commonwealth scheme that provides for the
primary payment as if the person were receiving an
instalment of the primary payment. In addition, failure
to do so will have the same consequences as if the
person were receiving the primary payment and failed
to comply with their obligations.
Schedule 1 contains the Method Statements for working out the
rate of DFISA-like payment.
The main features of the Method Statements are as
follows:
 the methods used in the income-support scheme
governing the relevant primary payment to work
out the primary payment are to be applied.
 any income and assets that, under the income-
support scheme governing the primary payment,
are disregarded in working out the primary
payment are likewise to be disregarded in working
out the primary payment for the purpose of
ascertaining the rate of DFISA-like payment.
 In Method Statement 1, the working out of any rent
assistance payable, or that would be payable, to a
recipient is to take into account adjusted disability
pension. This is because adjusted disability
pension is regarded as income when working out
rent assistance under the Act and for consistency
the same should apply when working out rent
assistance for the purpose of ascertaining the rate of
DFISA-like payment. Method Statement 2 does
not have this Step as rent assistance is not payable
as part of the primary payment for which this
method statement is applied.
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Part 1 Method Statement 1
This Part would apply if the primary payment that
applied to an eligible person was the ABSTUDY
Living Allowance.
Item 1 introduces definitions for the purposes of Part 1.
The only definitions that are not self-explanatory and
that require further explanation are as follows:
"daily provisional payment rate". This definition
refers to a person to whom step 10 of the Overall
Living Allowance Rate Calculator (also defined)
applies, but to whom step 11 of that Calculator does
not apply, and a person to whom step 11 of the
Calculator does apply.
A person to whom step 10 of the Overall Living
Allowance Rate Calculator applies and to whom step
11 of the Calculator does not apply is a person who is
not independent or who is independent but without a
partner. A person to whom step 11 of the Calculator
does apply is a person who is independent with a
partner.
"Excluded amount" has the meaning it has in section
118NA of the Act, namely:
excluded amount means an amount that is not income
for the purposes of the Social Security Act (SSA)
because of subsection 8(8) of that Act.
Examples of amounts that are not income for the
purposes of subsection 8(8) SSA are:
 a payment under the SSA;
 any return on a person's investment in a
superannuation fund until the person reaches
pension age or starts to receive a pension or
annuity out of that fund;
 the value of emergency relief or like assistance.
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Item 2 Method Statement
This Method Statement would be used as follows:
When the actual rate of a primary payment that was
paid or that would have been paid to a person has been
ascertained (ie being a rate that is nil, or a reduced
rate, because adjusted disability pension was regarded
as income in working out the primary payment)(Step
1) then, in order to ascertain the rate of DFISA-like
payment payable, the actual rate is subtracted from the
rate of primary payment that would have been payable
(notional rate) (Step 2) and the net amount is the rate
of DFISA-like payment payable (Step 3). The
notional rate is the amount that would have been
payable if adjusted disability pension had not been
regarded as income in working out the primary rate.
Part 2 Method Statement 2
This Part would apply if the primary payment that
applied to an eligible person was Exceptional
Circumstances Relief Payment, Farm Help Income
Support, Interim Income Support or Sugar Industry
Reform Program 2004 - Income Support Payment.
Item 1 introduces definitions for the purposes of Part 2.
The only definition that is not self-explanatory and
that would require further explanation is the definition
of "daily provisional payment rate" in that it refers to
sections 24A and 24B of the Farm Household Support
Act 1992 (FHSA)
Section 24A FHSA sets out the method for
determining the rate of Exceptional Circumstances
Relief Payment and section 24B FHSA sets out the
method for determining the rate of Farm Help Income
Support.
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Item 2 Method Statement
This Method Statement would be used as follows:
When the actual rate of a primary payment that was
paid or that would have been paid to a person has been
ascertained (ie being a rate that is nil, or a reduced
rate, because adjusted disability pension was regarded
as income in working out the primary payment)(Step
1) then, in order to ascertain the rate of DFISA-like
payment payable, the actual rate is subtracted from the
rate of primary payment that would have been payable
(notional rate) (Step 2) and the net amount is the rate
of DFISA-like payment payable (Step 3). The
notional rate is the amount that would have been
payable if adjusted disability pension had not been
regarded as income in working out the primary rate.